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TMI Blog2018 (10) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... , the protective assessment has no legs to stand and required to be deleted. On this reason also we delete the addition made by the AO. Accordingly the appeal of the revenue on this ground is dismissed. Addition u/s 69 - Held that:- The fact that the assessee had remitted the funds of ₹ 92.54 lakhs from banking channels and raised the loans with Dhanalakshmi Bank for an amount of ₹ 1,19,44,000/- was not disputed by the AO. As observed by the Ld.CIT(A), there was cash balance of ₹ 1,52,78,047/- as per the financial statement submitted by Shri K.Srinivasa Rao as at the end of 31.03.2010. From the above, it is established that Shri K.Srinivasa Rao is having sufficient source to make the investment of share application money in the company. Therefore, there is no case for suspecting the genuineness of the transaction having established the identity, credit worthiness and source of the capital. Hence, there is no case of making the addition u/s 69, accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. - I.T.A.No.331/Viz/2016 And I.T.A.No.163/Viz/2017 - - - Dated:- 28-9-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account was operative and the account was closed on 10.08.2006. 3.1. Similarly in Savings Bank NRO A/c No.017100400000140 of Dhanalakshmi Bank, Guntur, there were two major credits in 2006-07, for sum of ₹ 69,44,000/- and ₹ 27,69,000/- were credited by way of transfer from the following two loan accounts : Loan against Deposit No. : 17009000000921 Loan against Deposit No. : 17119000000990 The said loans were repaid and the loan accounts were also closed on 31.10.2006 and 30.08.2011 respectively. The AO also furnished year wise cash deposits and withdrawals from F.Y.2006-07 to 2009-10 in the said savings bank account as under : Fin.Year Total Cash Deposited Total Cash Withdrawn 2006-07 Nil Rs.33,03,501 2007-08 Rs.27,98,000 Nil 2008-09 Rs.26,02,000 Rs.61,000 2009-10 Nil Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely and in the hands of the company on protective basis. Accordingly, the AO made the addition of ₹ 98,00,000/- u/s 68 as income under the head income from other sources on protective basis. 4. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) observed that in this case, the assessee had received share application money from Shri K.Srinivasa Rao, Director. The Director has furnished the confirmation letters and also furnished the cash flow statement for the amounts of remittances made by him the amounts taken as loans from the banks and it s application beginning from 2006 till the investment is made. According to the assessee, the flow of funds of Shri K.Srinivasa Rao is as under (Extracted from the CIT(A) order page No.11 to 13) Firstly, it may be submitted that the aforesaid Share Application Money was paid to the appellant-company by the said Director, Sri K. SrinvasaRao from out of his own sources on 01-04-2010. And the flow of such money from Sri SrinivasaRao to the Assessee-company is as under: Sl. No. Period / Mode of Transaction Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 600/- to it in view of acceptance of the transfer of project order from their sister concern, M/s Sripathi Spinners Pvt. Ltd. Copies of these letters are anenexed. 8. In view of the above, the ister concern, M/s Vasanth Ltd. paid the machinery cost of ₹ 82,54,600/- to the sister concern, byname M/s Sripathi Spinners (P) Ltd. (vide Account statement No.2 annexed herewith) Payments made by M/s Vasantha Spinners to Sripathi Spinners. As recorded above the supplier company supply the machinery to MIS. Vasantha Spinners has requested by Sripathi Spinners who made with the payment for supply of machinery earlier. Hence MIs.Vasantha Spinners paid the following amounts to Sripathi Spinners. 06.10.2009 (cheque on Lakshmi Vilas Bank a/c enclosed) 22,54,600 06.10.2009 (cheque on Lakshmi Vilas Bank a/c enclosed) 50,00,000 12.10.2009 (cheque on Lakshmi Vilas Bank a/c enclosed) 10,00,000 82,54,000 M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the assessee is a NRI, had no taxable income in India, thus, he did not file any return of income in India. He is self employed in USA and the money was transmitted from USA through banking channels. The assessee had furnished the confirmation letter and confirmed the subscription towards the share application money. Therefore, held that there is no reason to suspect the credit worthiness and genuineness of the transaction and accordingly deleted the addition made by the AO u/s 68 of the Act. The Ld.CIT(A) relied on the decision of Hon ble Calcutta High Court in the case of Shankar Industries Vs. CIT [114 ITR 689], Hon be Madras High Court in the case of S.Hastimal Vs. CIT [49 ITR 273]. 6. Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before us. 7. We have heard both the parties and perused the material placed on record. It is the case of revenue that the assessee had not explained the genuineness of transaction with matching dates for investment in share application money. According to the AO, the cash flow submitted by the assessee does not support the investment with matching time schedule, hence the AO suspected the genuineness of the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28,00,000 3. 24.11.2009 34,00,000 Total credits 92,00,000 7.2. Shri K.Prasada Rao had withdrawn the amounts deposited in Lakshmi Vilas bank and Dhanalakshmi bank and provided the funds to his son, Shri K.Srinivasa Rao. The department, during the appeal hearing did not provide any evidence to controvert the finding of fact given by the Ld.CIT(A) that the funds were provided by Shri K.Prasada Rao from the withdrawals made for the purpose of real estate business. The department also did not bring any evidence to show that the funds transmitted through banking channels from US and the loans raised in India for ₹ 69,44,000/- and ₹ 50,00,000/- as discussed earlier in this order aggregating to ₹ 1,19,44,000/- apart from the funds transferred from US amounting to ₹ 92,54,600/- was invested in any other manner other than the investment in the assessee company. Therefore, evidences placed by the assessee establish that the sufficient sources are available to Shri K. Srinivasa Rao to make the investment of ₹ 98,00,000/-. Before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On appeal before the CIT(A), the Ld.CIT(A) observed from the financial statement submitted by Shri K.Prasada Rao for the period ending 31.03.2010, that there was cash balance in hand of ₹ 1,52,78,047/- When the rental deposit of ₹ 50,00,000/- was deposited to the company s account, the account of Shri.K.Srinivasa Rao was debited and paid to the assessee company. The assessee also furnished the account copy of K.Srinivasa Rao before the Ld.CIT(A). The Ld.CIT(A) after verifying the details accepted that Shri Srinivasa Rao had the cash balance of ₹ 1,52,78,047/- which is sufficient source to make the payment of ₹ 50,00,000/- in cash and accordingly held that the transaction is genuine and the assessee has established the identity, credit worthiness of the creditor, therefore, deleted the addition. 10. Aggrieved by the order of the Ld.CIT(A), the revenue filed appeal before the Tribunal. During the appeal hearing, the Ld.DR supported the order of the AO. Per contra, the Ld.AR argued that there was sufficient cash balance in the account of Shri K.Srinivasa Rao to fund the sum of ₹ 50,00,000/-, therefore, there is no case for making any addition u/s 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cash was established, there is no case for making the addition in the hands of the company. Even otherwise Shri K.Prasada Rao is operating joint account with his two children, wherein, the rent deposits were credited in his account, which was withdrawn periodically and the kept with him in their possession. This fact was supported by the availability of cash balance as on 31/03/2010. Before the Ld.CIT(A), the assessee had furnished the financial statements, as per which the cash in hand as on 31.03.2010 was ₹ 1,52,78,047 as per the order of the Ld.CIT(A). Shri K.Srinivasa Rao is holding cash balance of ₹ 1,52,78,047/- and the amount remitted for rent deposit was only ₹ 50,00,000/- to the company s account debiting the account of Shri K.Srinivasa Rao, thus the source of ₹ 50,00,000/- stands explained. Since the department did not place any evidence to controvert the finding given by the Ld.CIT(A) with regard to the availability of the cash balance, we hold that the source of the deposit, identity and genuineness of the credit was explained and we do not find any infirmity in the order of the Ld.CIT(A). Accordingly, we uphold the order of the Ld.CIT(A) and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly brought to tax. 14. The assessee went on appeal before the CIT(A) and the Ld.CIT(A) deleted the addition made by the AO holding that the source is explained and there is no case for making addition. 15. Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before this Tribunal. 16. We have heard both the parties and perused the material placed on record. The assessee is a NRI, remitted the funds through banking channels to the NRO/NRE accounts maintained with Dhanalakshmi bank, Guntur as discussed in this order in the case of Sripathi Agros and Land Developers Pvt.Ltd. in I.T.A. No.331/Viz/2016. The assessee had remitted the funds to the extent of ₹ 98.54 lakhs apart from the loans raised in the country for an amount of ₹ 1,19,44,000/- from Dhanalakshmi Bank, Guntur. Initially, the said amounts were invested in sister concerns through his father, Shri K.Prasada Rao in M/s Sripathi Spinners Pvt. Ltd., M/s Lakshmi Works Ltd, M/s Vasantha Spinners and Super Sales Ltd. The funds were rotated through the above business concerns to facilitate and accommodate the requirements of the concerns in which the assessee and his family members have substan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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